My job explained

You know if your competing for the top place as a trader you can't afford to sit back and take it easy all the time because then the guys who are not as good at trading but were aggressive and avoided bad luck will be over taking you. Enough of those guys will just lose it all but risk taking will always be a big factor of your success.

Risk taking does quite interest me, like when you pay insurance you are paying a premium for them to cover the extreme situation but on average you would be better of paying no insurance, obviously, it's just taking a losing bet but one you are often willing to take because you want to avoid the extreme situations. Even the insurance companies insure themselves with other insurance companies who do the same back to avoid going bust in an extreme situation!

I like risk because taking risk makes money, that's how the insurance companies profit and that's how I profit as a trader. Many people in the market are willing to pay the spread between the bid and the offer to obtain a price right now, I am trying to profit from this and get in and out quickly, but I don't trade outright much, I hedge myself and wait for the two products to revert whilst trying to work the bid and offer spread on each individual market to my advantage. The spread often reverts especially if nothing fundamentally is changing. The bid is just the highest people are willing to buy now and the offer is the lowest people are willing to sell if you want to sell lower you can do it instantly by selling it to the people on the bid and vice versa.

So my job is to scalp the market, so I am getting in and out quickly, it's offering a service to others and providing liquidity in the market place, it's useful for some others but let's face it it's not something to be proud of to do as a job although I love doing it. But it doesn't just make money so easily because money is being drained out of the market by the exchange and essentially the middle man and fundamentals are ripping spreads apart even on a hourly basis at times, news comes out during the day and sometimes it can be unexpected news like a downgrade on a countries rating. So money is being taken out by people allowing you to trade and the actual traders are fighting for the rest of the money but if your good the rewards are fantastic. In my job I am essentially selling something to buy it back at the next price down because I scalp and don't position trade, so I don't necessarily need to know the direction the market is going, it's kinda arbitraging. Interestingly people make money just by queuing on bids and offers, if your first in line you have a big chance to get back out at the same price and sell or buy it off/from the people behind you otherwise you have a free shot at queuing the other side to get out for a profit. Although getting first in line means taking the risk initially, your price could become hard to get back but once everyone has piled in behind you, its generally profitable as long as bids and offers aren't getting smashed so fast. You can always que for a price miles away from the action and be fastest to do so, then if it ever comes to that price you have a great chance to make money. I would assume you fight against fast computers to do that as when the market opens the prices all the way up and down are filled instantly. As prices move sometimes lifting (buying) the offer is the only way to get a good price, if you know it's likely to become bid then queueing the current bid is near useless!

What I do is trade similar products that move generally together, the markets make there moves on fundamentals but everything else is cause by panic, emotions and people reacting in different ways. In spread trading (where you buy one thing and sell something else closely related) you make money by the volatility in the market on a short term basis, the markets move independently but with some kind of correlation and you just get in and out. Also the spread has meaning because the difference between the two products say the 2 year and the 5 year German bond means something because lending money at different points in the future will give different returns and this changes therefore the futures curve shows if the economy is going to strengthen or weaken for example. So anyway most days the spread prices are just bouncing around a range, it's great because you just wait for it to hit the top and you sell the spread, it bounces back and you get out it goes a little further and you buy it and you work a good price by queing. Unfortunately there are many things going on in the world and the curve on interest rates on bonds is getting flattened and then being smashed back to an upward sloping curve constantly and queing can actually mess you about as the markets can move fast unexpectedly. So spread prices are being whacked around often but things have been pretty manageable and I heard there was a period of 6 months where nothing moved together in what I trade and it just took out loads of traders like me, unfortunately. Also when selling a spread you have to sell more when it goes higher having already sold unless you know something is changing and there's reason why it could continue to go up, because otherwise this spread moves a little further than you think all too often and all too often it comes back and by averaging it means you can cope when the spread trends, it normally trends with dips so it's okay and you would be paying up far too often without averaging. Although as you average your position quickly increases and it can get ugly.

Recently the markets are coming perhaps more efficient, say the bobl moves up, the schatz instantly flips, so the guy on the offer who is say 3/4 of it now buys at this price level making the offer now the bid and you didn't have time to sell the bobl on the offer and que the bid on the schatz or even take the offer on the schatz which would seem okay if the bobl already moved and you got filled on the new offer. That is what has changed in the last 2 weeks and apparently it's what happened "in the old days" it's okay you can still do your job as a spreader just it's a little frustrating.